Global Industrial Company (GIC) Q4 2007 Earnings Report, Transcript and Summary

Good day ladies and gentlemen and welcome to the fourth quarter 2007 Systemax earnings conference. My name is Melanie and I’ll be your coordinator today. At this time all participants are in a listen only mode. We will conduct a question and answer session at the end of today’s conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I’ll now turn the call over to Ms. Donna Gehnrich, moderator. Please proceed.

Welcome to the Systemax fourth quarter 2007 conference call. I’m here today with Richard Leeds, Chairman & Chief Executive Officer of Systemax; Gilbert Fiorentino, President of Systemax’s technologies product business which includes TigerDirect, Comp USA and Misco; and Larry Reinhold, Executive Vice President and Chief Financial Officer of Systemax. This discussion may include certain forward-looking statements. It should be understood that actual results may differ materially from those projected due to a number of factors including those described under the caption forward-looking statements in the company’s annual report on Form 10K. This call is the property of and is copyrighted by Systemax, Inc.

First, let me apologize for the false start we had last week with the press release announcement. This is our first year where we must comply with Sarbanes-Oxley Section 404 and getting everything ready for earnings release is a complex project. Larry will talk more about that later in the call. I believe you’ll agree that the numbers we reported today were worth the wait. I am very excited and proud to report that we achieved another quarter of stellar sales and earnings. Sales reached $769 million an increase of 19% over the fourth quarter of 2006 an all time high for the company with sales growth in each of our business segments. Sales of technology products computers, computer supplies and consumer electronics grew by 19% to $712.8 million and sales of industrial products grew by 13% to $56.5 million. While not yet a significant source of revenues our hosted software business PCS also grew its revenues. In addition to sales growth a driver of our strong bottom line results in the quarter were to sustain the improvements in gross margins. As previously discussed we put significant focus on improving our gross margins in 2007 and we are pleased with our success in this area. We posted 50.5% in gross margin in the quarter down slightly on a sequential basis from the third quarter but still significantly higher than last year. The improvement in the result of maintaining gross margin level in the technology products segment as compared to last year, competitive sourcing advantages and cost efficiencies in our warehousing and distribution operation. We are also successfully leveraging our cost structure. SG&A costs as a percentage of sales have been relatively stable despite our spending significant amounts on costs to comply with the Sarbanes-Oxley Act and due to our successful turnaround to our UK operations, we had a significant income tax benefit in the quarter which Larry will discuss later. All this had led to an all time best $28 million in operating income, $24 million in net income and $0.64 in diluted earnings per share for the quarter. For the full year we posted $2.8 billion in sales up 19% over 2006, $96 million in operating income up 54%, $69 million in net income up 54% and $1.84 in diluted earnings per share up 51%. I am also excited to announce that last week we completed our Comp USA acquisition and we are now in possession of all 16 Comp USA retail stores in addition to the Comp USA website that we acquired in January. Gilbert will speak more about Comp USA in a moment. Our strong financial performance has resulted in our board of directors last week in declaring a special $1.00 per share dividend. Now, Gilbert Fiorentino, President of our technology products business which includes our TigerDirect and Misco branded operations and starting in Q1 of this year Comp USA will discuss highlights in those businesses.

Technology products continued to grow strongly in Q4 throughout North America and Europe. Sales increased in North America by 18% and in Europe by 21%, that’s 11% after excluding favorable exchange rate effects. Overall sales growth was driven by our business-to-business sales, retail and Internet channels. Our product expansion strategy to compete in the area of flat panel TVs and other consumer electronics equipment has been paying off by helping us drive more customers to our selling channels and increasing opportunities to build customer value. In the fourth quarter we added Bose and Hitachi to our roster of direct tier one consumer electronics manufacturers in our efforts to further solidify TigerDirect as a major player in the high margin world of home entertainment consumer electronics. In the CE world we now have direct purchasing relationships with Toshiba, Mitsubishi, Hitachi, Viso, Bose, Yamaha, Onkyo, Harmon-Garmin, Magellen and Nokia. Direct relationships enable TigerDirect and Comp USA to bring the best prices to our customers at the highest margins for our company. During the fourth quarter we opened one new retail store in North America bringing the total number of TigerDirect retail outlets to 11. We opened the store in Hoffman Estates, Illinois our third in Chicago land bring us additional economies of scale in advertising and distribution. This new TigerDirect store is located on a very heavily trafficked intersection close to the Woodfield Shopping Mall, the largest retail district in the State of Illinois and has quickly become a destination for regional shoppers looking for the larger selection of the best deals in PCs, TVs and more. We’re currently reopening the Comp USA stores that we acquired this quarter and in the long term intend to rebrand our US TigerDirect stores as Comp USA leaving us with a single retail brand strategy in the US. TigerDirect.com, our website continues to concentrate on its online business. During October, Stores Magazine ranked TigerDirect.com among the top 50 online retailers that the online retail shoppers like the most. In fact, TigerDirect.com ranked ahead of industry giant Dell.com. Hit wise a leading industry ranking servicer websites continues to rank TigerDirect.com in the top 10 most heavily trafficked sites in the computer sales category. Nielsen Ratings ranked TigerDirect.com website as the sixth most visited electronics website during the busy month of December. In the fourth quarter traffic to our websites continued to grow as we saw a 21% increase in visits over the third quarter 2006 and Computer Shopper readers ranked TigerDirect as one of the best places to buy online as well as one of the best places to buy desktop and notebook PCs in that magazines 2007 Shoppers Choice Awards. Enhancements made to the TigerDirect.com website in the fourth quarter included the launch of two new payment methods, Google Checkout and PayPal Checkout both of which have a loyal base of users who shop at TigerDirect and these options make us easier to do business with. We also launched a new item recommendations page which improved our conversion rates in testing. And, TigerDirect.com continues to break new ground for the electronics retailer category by continuing to develop product informational videos on our products. During 2007 we produced 708 new product videos which attracted a combined 12 million views. We were also very proud to offer our first ever live broadcast by an electronics retailer on Black Friday 2007 during which we broadcast streaming live video for 15 hours straight in support of our Pink Friday Campaign which in addition to stimulating strong sales on the busiest retail day of the year also supported our partnership with the Suzanne G. Komen Fight for the Cure. Partially as a result of our effort, PC Magazine called TigerDirect the best shopping site for Black Friday. By renaming Black Friday to Pink Friday we supported a deserving charity, donated over $100,000 and benefitted our shareholders by giving customers another reason to do business with us. In Europe we saw strong sales growth in both business-to-business and Internet sales as the strategies that we have implemented over the past several years continue to show substantial returns. As Richard mentioned previously Systemax as recently completed the acquisition of Comp USA. We have been operating the new and improved Comp USA website since the middle of January. While sales are modest on this website in comparison to TigerDirect, we feel that Comp USA has a tremendous amount of brand equity and we will be capitalizing on that in the future. In the last several weeks we have completed the acquisition of 16 former Comp USA retail stores in selected Florida, Texas and Puerto Rico. As of today we have reopened nine of those locations as the new and improved Comp USA retail outlets and we anticipate the remainder will be opened within 30 days. We are very excited about the opportunities that Comp USA is providing for our customers and employees and believe it will be a great investment for our shareholders. I’ll now turn the call back to Richard Leeds to discuss our industrial products and other businesses.

Our industrial products business, Global Industrial and Misco Industries continues to perform extremely well due to its business model offering our customers low price and high quality products combined with its industry leading website technology. We expect to continue growing our product offerings, increasing our business sales representatives and utilizing our profit center software technology to continue profitably scaling the business. Our hosted software business, Profit Center Software continues to advance the development of the PCS web based on demand software applications to enhance its features and functionality for multichannel merchant and direct marketers. We also continue working on significant deployments for a number of third party clients and anticipate successfully going live with these customers in the current months. Our strength and leadership team at PCS led by CEO John Marrah, COO Dominique Laborde continues to make excellent progress in developing the product, adding additional features and functionality and getting momentum in the marketplace. Finally, as many of our investors know, one of our small business units processes rebates in North America offered by both our own businesses as well as numerous third party customers. During the fourth quarter we were served with a class action lawsuit and the Florida Attorney General’s office order us to provide information about historical rebate claims and payments. We generally do not comment about ongoing litigation matters. However, given the recent publicity surrounding these matters I’m breaking with policy to provide our investors with a few comments. The class action lawsuit was filed by one person claiming he was inappropriately denied one $40 rebate. The court has not yet certified this person as representative of the class. We have moved to dismiss this lawsuit and we will vigorously defend ourselves in this litigation and we’re cooperating fully with the Florida Attorney General’s office. The various press reports that have been published contain inaccuracies and innuendo. We’d expect that at the end of the day the inaccuracies will be corrected for the record and the focus on our company will return to how we are delivering value to our key stake holders. As shareholders who have trusted us to provide a healthy return on their investment, our customers who align us with great value and service and our employees who work very hard every day doing great work in a very competitive environment. I want to thank all of these people for their confidence in the company. I will now turn the call over to Larry our CFO to discuss more detailed financial results.

The company’s financial position showed continued strength in the fourth quarter of 2007. At the end of Q4 our working capital of $273 million up from $253 million at the end of Q3. Our current ratio was a healthy 1.82 to 1 essentially flat with the ratio in Q3. Cash balances were $128 million up $30 million from Q3. During the full year 2007 we generated cash from operations of $97 million while investing $8 million in capital expenditures resulting in free cash flow of $89 million. This strong cash generation enabled the $37 million special dividend we paid to our shareholders during Q2 2007 and it will enable our second dividend of a similar amount to be paid next month. At the end of Q4 our inventory was approximately $250 million up 7% from Q3 significantly less than our 12% sequential growth in sales in Q4 over Q3. At the end of Q4 we had no debt outstanding on our revolving credit facility principally the result of timing of receipts and disbursements in Europe where we historically have had net borrowing. Our total availability under our credit facility was approximately $97 million giving us a total of nearly $225 million in cash and available credit at December 31. During Q4 our SG&A expenses were 11.9% of sales compared to 11.1% in Q4 of 06. For the full year our SG&A was 11.9% versus 12.0% in 06. We are continuing to manage effectively and leverage our SG&A as a percentage of sales despite incurring significantly increased administrative costs for accounting, auditing, consulting and legal fees associated with compliance with the Sarbanes-Oxley Act. Our effective tax rate during Q4 was 18.9% and for the full year was 30.5% both of which were down significantly from the prior year. The reason the tax rate was so low was due to the success of the turnaround in our UK operations. At the end of 2005 the UK had a large net operating loss carry forward. Due to the UK having incurred substantial losses for several years up to that point a decision was made to book a valuation allowance and effectively write off those NOLs in the fourth quarter of 2005. Our effective tax rate was actually 82% in that quarter and 65% for the full year of 05 because of that write off. At the end of 2007 due to the UK’s history of profit since that point we made the decision that the valuation allowance of those remaining NOL carry forwards could be reversed. Net income was approximately $24 million in the quarter or $0.64 per diluted share compared to $8 million or $0.22 per diluted share last year. As Richard mentioned earlier 2007 was the first year that Systemax has had to comply with the internal control and documentation requirement of the Sarbanes-Oxley Act. We had operations in numerous parts of North America and Europe and different financial systems. The process of consolidating and reporting our worldwide results is complex and time consuming. We found that we wanted to take a few extra days to dot all the Is and cross all the Ts. For Q1 and subsequent quarters we’re going to make some internal changes to ensure that we can better estimate the date when we’ll be finished and prepared to release our quarterly results. I am pleased however that under the requirements of Sarbanes-Oxley management and our outside auditors have concluded that our system of internal control does not have any material weaknesses. Now, I’ll turn the call back to Richard Leeds.

Thank you for listening to our fourth quarter conference call. I’d like to now open the call for questions.

Richard, if I could interrupt for two seconds, I have a correction. I said that in the fourth quarter traffic to our website continued to grow as we saw a 21% increase in visits over the third quarter of 2006. Of course, I meant the fourth quarter of 2007.

(Operator Instructions) Our first question comes from the line of Sam Mendoza with Advent Core Capital. Go ahead. Sam Mendoza – Advent Core Capital: My question had to do with better understanding the rebates and how that works. Can you give us a sense for what percentage of your volume has rebate associated with it and can you help us understand kind of the breakage assumptions that you guys use and what your historical breakage has been?

We don’t disclose the detail of rebates and the specific assumptions that go into it but let me talk about a couple of things. First, there are two different types of rebates. First, most rebates are offered and funded by the manufacturers. Second, some rebates are offered and funded by the retailer or the etailer. Manufacture rebates do not impact our financial statements, they are simply a transaction between the consumer and the manufacturer although if we process the rebate we are sort of the manufacturer’s agent and act under their instructions. Retailer rebates are simply one of the tools that the company can use in the pricing of its products and the estimated costs of a rebate program are reflected as a reduction in our sales revenue similar to how estimated sales returns are reflected as a reduction of sales revenue. Sam Mendoza – Advent Core Capital: Okay. I guess on those can you help us with what the historical breakage has been or what your assumptions are for those?

That’s a level of disclosure that we really don’t get into. We haven’t historically and we won’t be doing that today. Sam Mendoza – Advent Core Capital: Okay. I guess my other question you mentioned or someone mentioned in their comments that the recent reports contained inaccuracies and innuendos and I was hoping you might highlight for us what some of the bigger ones were.

I have pretty much have said whatever I feel we can say so I’d greatly appreciate it if there could be no more questions about the lawsuit on this. Sam Mendoza – Advent Core Capital: The question wasn’t related to the lawsuit it was related to the inaccuracies in the earnings report and whatever else?

As I said in my comments, those will come out over time and we feel confident that we’ll have our reputation restored.

(Operator Instructions) Our next question comes from the line of JD Padgett with The Boston Company. Go ahead. James D. Padgett – The Boston Company: I had a couple of questions, one was just curious how much did you pay for the Comp USA assets and will we see that reflected in the balance sheet in Q1?

The purchase price which we’ve disclosed, we made the acquisition in a couple of different stages. First, we acquired the Comp USA website and other assets related to that and that purchase price was just under $19 million. Then, we acquired the 16 retail stores, the fixtures and furniture within those stores and assumed those leases, the purchase price of those stores was under $10 million. The aggregate for both, the Comp USA was around $29 million. James D. Padgett – The Boston Company: $25 million?

$29. James D. Padgett – The Boston Company: $29 million total. Okay. And, all those stores are under lease right?

They’re all leased, correct. James D. Padgett – The Boston Company: And did any of that cash go out at the end of 07 or is that all going to happen in 08?

It all was funded in the first quarter of 08. James D. Padgett – The Boston Company: Okay. Then, the rationale behind converting the TigerDirect brick and mortar to Comp USA have you guys done any work to understand how strong of a brand name in a bricks and mortar world Comp USA still is and if that’s going to be a wise conversion?

Yes, we have. At time Comp USA did nearly $5 billion a year in the United States alone and to support that they spent literally hundreds of millions of dollars over time advertising the brand in newspaper circulars and radio advertising and things like that to build their own traffic. Having a two brand retail strategy would be expensive and fragmented for us. We’re confident that the Comp USA brand is nearly household brand recognition so changing the TigerDirect stores in the United States to Comp USA will give us a single brand strategy at retail, it will allow us to maximize our advertising dollars and we believe has the most brand awareness among the customers. James D. Padgett – The Boston Company: Then the online channel? You’ll run both separately still?

Right now we have two online websites. Today we operate the CompUSA.com website. It’s really no secret, we don’t keep it secret that Systemax owns that site and of course Systemax also owns the TigerDirect.com site. Towards the end of the year after we have gone with a single brand strategy at retail and measured how that works for us at retail we will look at having a dual brand strategy on the Internet versus a single brand strategy and make more decisions. James D. Padgett – The Boston Company: Okay. Then I guess just one other question for you Larry, how should we expect the inclusion of the Comp USA assets to impact the P&L going forward?

Well, I mean like any business acquisition we will from the sales, the revenues and the costs will hit our P&L and what we’ve paid for the assets will be on our balance sheet. We will be doing, as required, we will be doing appraisals of the assets, allocate them between [inaudible] and other intangibles that we acquired and so there will be some amortization of those assets that are required to be amortized. Some of the assets may not be required to be amortized under the current accounting rules. James D. Padgett – The Boston Company: Okay. I was just thinking about it conceptually, the online channel you probably can layer that in with pretty small incremental costs I guess aside from just running the site and the website redesign.

Yes. That’s correct. James D. Padgett – The Boston Company: So that’s got to be pretty accretive.

That’s part of the rationale for the acquisition was the online business again, they’re separate TigerDirect.com is separate from CompUSA.com but a lot of the back, the technology and infrastructure supporting it is leveraged between the two. So, we viewed the as a very accretive and very synergistic. James D. Padgett – The Boston Company: Any sense for how much incremental new users that potentially brings or incremental revenue from the online channel, Comp USA online?

We are very excited about that question because during our due diligence before we purchased the Comp USA assets we were able to run overlap of the customer list between the existing TigerDirect.com customer list and the Comp USA customer list and we found there was only a 7% overlap between the two customer lists. So while we’re able to leverage much of the back office functionality we are also finding that we’re picking up a lot of new customers from the brand awareness that Comp USA had that TigerDirect did not have. So, that’s very exciting in terms of incremental business for us. James D. Padgett – The Boston Company: Is that something you can quantify percentage relative to the existing base or anything like that? Just to help us understand.

I could but I think they’d shoot me.

It’s relatively small in comparison to the Tiger business.

The current business is, yes.

But we think we have an opportunity in there. Also, you’ve got to realize that the retail outlets we bought were among investor forming of the old Comp USA format and we think that under us we’ll be able to change those and we have the best locations and we have picked up some good managers there. So, we’re pretty excited about the stores as well. James D. Padgett – The Boston Company: That sounds like then it’s nothing that’s going to be dilutive to earnings, the new retail stores. If anything it’s accretive?

Well, the stores had been closed and then we had cleaned them up and had reopened them so there is a little bit of startup in there. But obviously, we like to make acquisitions that are accretive. James D. Padgett – The Boston Company: So it just takes a little bit of time to kind of rebuild the foot traffic and all that stuff?

Exactly. We’re pretty excited about it.

Our next question comes from the line of Stanley Stackowitz, private investor. Go ahead. Stanley Stackowitz – Private Investor: I have a question on the acquisition, what is the volume anticipated in the Comp USA stores? Or, what was the yearly volume on the Comp USA stores?

That’s a level of disclosure that we haven’t made. Stanley Stackowitz – Private Investor: I’m trying to figure out if you keep the same type of volume how much of [inaudible] of revenue for 2008?

As I said in the answer to the last question, I’m not really trying to avoid answering you but it’s clearly a rebuilding model right now because Comp USA was not performing well. We closed the stores, a couple of them, for a few weeks, refurbished them and reopened them. So, I don’t think it’s fair to look at what they did in the past because it was a company that was in trouble and we think we have a much better formula for getting sales into the stores than they were. So, it’s hard for us to look at, we have our internal projections and at this point we don’t want to release our projections. Stanley Stackowitz – Private Investor: Come on, give us a little hint.

We’re just going to work really hard to get them to be successful. Stanley Stackowitz – Private Investor: And is there any type – probably something you can’t answer either, do you eventually plan on with the stock being this low especially with the hit that we took of $2.30 since you cancelled the earnings call on Wednesday, of possibly implementing a stock buyback?

A stock buyback is something that the board continually discusses and we’ll continue to discuss it and evaluate it in the future. I mean, it’s something we’ll just be looking at all the time.

We have a follow up from the line of JD Padgett with The Boston Company. Go ahead. James D. Padgett – The Boston Company: I was just curious if you could elaborate some on the strategy of how you fix it relative to previous operators for Comp USA bricks and mortar? Or, does that kind of divulge some strategies that you’d prefer not to share with competition?

I think we can share a little bit.

I can share that. A lot of people don’t know that we had 11 retail stores open at the end of the year, they were all TigerDirect stores and we were very happy with the performance of our own retail stores before we got into the Comp USA acquisition. Of course, those were the TigerDirect stores, Systemax bought the Comp USA, they’re still separate. The TigerDirect stores which will be rebranded as Comp USA stores in the future have a completely different merchandising strategy, they have a different labor model, they have a much different base of customer in terms of a do it yourself customer who comes in to buy memory, video cards, hard drives. For example, we’re currently the largest Seagate hard drive reseller in our channel. And so, these customers who come in to buy these do it yourself items, for example we might have 30 motherboards in our of our stores and while the big box retailers have their place in the world if you go into one of the big box retailers you might find two or three mother boards and we’ll have 30 CPUs to support those motherboards and the big box retailers might have a few CPUs that they sell, if they sell any. Bringing that do it yourself customer into the store means bringing a customer in that’s not shopping in those big box stores, it’s a customer that’s also going to buy laptops and televisions and desktop computers and everything else but having a much broader depth, much broader line of products and going far deeper into those lines is what distinguishes us from our competition and it’s what made our retail store successful before we even considered buying retail stores. We’re not just jumping into a business we don’t know. And I’ll add, even though Comp USA was a company that was in trouble, it was in trouble because of its own merchandising, its own competition, its own advertising model. We have a completely different advertising model, we use the Internet to drive customers into our stores so it’s a very different business. But, even though Comp USA was losing money and even though they were in trouble, it was because of their advertising, it was because of their merchandising, it was because of their product selection and how they positioned their selves against the competition. We’re very excited that we’re changing all of that and we’ve acquired a tremendous number of very, very good employees as part of the Comp USA acquisition. So we’re excited about the district managers, the store managers and the store level employees, almost 700 employees that were acquired to support these stores where there were significantly more employees in those stores before we bought them. So, the employees give us a tremendous start on this new business that we’re reengineering. James D. Padgett – The Boston Company: I’m trying to think the old Comp USA, I guess it was not as consumer friendly as obviously a Best Buy and that sounds like that’s kind of the niche that you’ve preserved so there’s not really any confusion and a message potentially changing for the people that use to go to Comp USA.

We obviously have a rebuilding of the customer base at Comp USA and that’s why before I said we really have to look at the business model there.

But, this is a long term business. This is not a quarterly business, we’re not just trying to make every quarter, we’re trying to build very long term value for the shareholders and this is a long term commitment but it’s one that we’re confident about and one that we’ve analyzed deeply and we feel good in terms of the long term results. James D. Padgett – The Boston Company: Do you think the customer that you are now and hoping to attract to Comp USA is kind of more the professional IT person that’s going in to buy some parts to fix his network? Or, is it the consumer?

It’s everything. If we can take a tiny bit of market share away from each of the competitors and there are literally dozens, then we can reengineer that business into doing very well as previously we have done in our own stores. James D. Padgett – The Boston Company: Okay. Then one other question was just on the software business I know sometimes in the 10Qs for instance, you give the segment reporting for that in terms of the amount of money that you’re losing there funding the development; do you have that for the fourth quarter off hand?

I don’t have it in the room with me for the fourth quarter. I have for the full year that our PCS segment incurred an operating loss of $15.8 million. As I recall, it was around $9 point something at Q3, I can’t remember exactly. I just don’t have that in front of me right now. James D. Padgett – The Boston Company: Okay. I think actually if I have the numbers in here right it was somewhere around $11 million so it looks like maybe another $5 million that you invested in that company. Any sense for when you kind of hit the tipping point there where that’s a breakeven proposition?

Well, again we don’t disclose very much, if any forward looking guidance. But, I think it’s not necessary well understood that the accounting model for PCS is a heavily deferred revenue recognition where the customers pay us significant amounts of money to get them live which none of what we are paid is recognized as revenue on our financial statement until the point that they do go live. Then, that implementation revenue is spread over a period of time in the future along with monthly hosting fees which are recognized as billed. At the end of 07 we have a significant amount of what we call deferred revenue on our balance sheet, in excess of $5 million that represents cash that we’ve received in our PCS business for implementations that is not yet hit the income statement and benefitted the income statement. So, the business is certainly expected to be very profitable and it will turn cash flow positive well in advance of when it will be earnings positive. During 2007 again, the operating loss was in excess of $15 million and it certainly was both cash flow and earnings negative during the year. James D. Padgett – The Boston Company: But it’s something where it sounds like the pipeline is strong and as more of these things go live, probably 08 is a little too soon to think but 09 and beyond. Obviously, you wouldn’t be investing there if you didn’t think there was the possibility for nice returns.

We’re very positive about the business. There’s a number of companies out there with similar type businesses that have done very well and we see that the opportunities there are huge and the product is a great product, we use it ourselves and as we bring our customers live it will be making it easier for us to get more and more customers.

Ladies and gentlemen that does conclude the time that we have for questions today. I’d like to turn the call back over to Mr. Richard Leeds for closing remarks. Please proceed sir.

Thank you for listening to our fourth quarter results and I’ll be looking forward to announcing our first quarter results in the future. Thank you.

Ladies and gentlemen thank you for your participation in today’s conference. That does conclude the presentation. You may disconnect. Have a wonderful day.